A question about brokers

Investment Analysis Clubs Saul’s Investing Discussions
21

Hi Lego,

They tell me it’s the regulators’ rule, not theirs, and they have no choice. They may be lying of course.

Saul

22

Hi Lego,

They tell me it’s the regulators’ rule, not theirs, and they have no choice. They may be lying of course.

Saul

I always thought the 3-day rule only applied to non-margin accounts? Getting a margin account would solve that problem if this is the case. I have always make my accounts margin capable even though I never use it just for this.

23

Hi Saul,

RE: broker

I use IB. Very very cheap and that’s why I"m there.

Communicating with them is a challenge as they do seem to be undermanned on the phones and chat. The chat function frequently breaks down and disappears, just as the agent begins typing a response. On a scale of 1 to 10 re: communicating they get a 4. And as one of my cohorts in MF Options reminds me, it is because they are set up for professionals. You may be professional enough and although I am not, I just can’t bring myself to pay $5, $7 or $10 per trade when for the very same trade that IB charges $1. That would be unAmerican.

But during my conversion from Morgan Stanley to me managing, I traded 3 to 9 times a day and what a world of money I saved with IB instead of Tradeking (good house though I have my reservations with them), Options express (more money than TK) and Vanguard. And eTrade who tips in at $9.95 per trade. Ridiculously high charge.

Additionally, they have way more features than I can even list or get to review. It is a very very very powerful platform that probably can save you more money than just with low commissions.

I begrudgingly use them as the rank amateur in their professional world but I have also been thinking of buying their stock since the beat the pants off everyone else.
Mykie
PS
they are the number 1 online brokerage pick by CNET magazine, 3 years running.

24

For those who have experience in this arena, related to Saul’s OP topic is switching costs: what is the best way to avoid or minimize them?

Thanks,
Pete

Hi Pete,

I found no charges usually for a onsey - twosey transfer but there usually is a charge for a full transfer.

So I usually keep some stocks in the platform I am leaving that make it easy for me to watch as a batch and that don’t cost me much in transaction fees as I don’t buy and sell (like my dividend portfoli).
Hope this helps
Mykie

25

Saul,
You seems to adjust your portfolio quite often. You may qualify as a pattern day trader in which case your funds are immediately available for reuse in a margin account. Just a thought.

Rob

26

I always thought the 3-day rule only applied to non-margin accounts? Getting a margin account would solve that problem if this is the case. I have always make my accounts margin capable even though I never use it just for this.

Hi Hop Jokey, Yes, you’re right. Chris sent me a DM with the same information and I’ve already started changing one of my accounts to a margin account. Can’t do it with an IRA account though.

Saul

1 Like
27

Communicating with them is a challenge as they do seem to be undermanned on the phones and chat. The chat function frequently breaks down and disappears, just as the agent begins typing a response.

Hi Mykie,

I will have to give some thought before using IB. Communication is important to me. I don’t need it often, but I want someone to be there when I do need it. In the old days you used to pay a half or three-quarters of a percent commission on a trade ($50 or $75 on a thousand shares of a $10 stock). Nowadays, the difference in commissions between $7 and $1 isn’t that important. A one penny difference in fulfillment price is way more than the difference in the commissions.

But thanks for your help. I’m weighing up all the ideas I get.

Saul

28

Saul,
You seems to adjust your portfolio quite often. You may qualify as a pattern day trader

Hi Rob, I had to look up Pattern Day Trader as I had never heard the term.This is what Wikipedia says:

Pattern day trader is a term defined by the U.S. Securities and Exchange Commission to describe a stock market trader who executes 4 (or more) day trades in 5 business days in a margin account

I don’t qualify as I never execute ANY day trades.

Saul

29

Nowadays, the difference in commissions between $7 and $1 isn’t that important. A one penny difference in fulfillment price is way more than the difference in the commissions.

Hi Saul,

I hope you go to their site and check them out since they have a very very powerful platform. If you don’t need help often then the human to human communication recedes in importance. When I started, I needed lots of help as their platform is not intuitive and I was new to online trading, hence overuse of possibly their worst feature.

They also have a program where they pay you when they borrow your shares for short sellers. Pretty great to receive a credit instead of paying out.

I have confidence in management that they will eventually correct their deficiencies.
Just saying,
Mykie

30

Hi Saul,

I’ve been following your board but hadn’t had much reason to post before. I really should have just to thank you for the great information you provide. However, I decided to answer this post, a little late, to give you some info on the broker I use, Scottrade. I started with them over 10 years ago because a friend recommended them and they had a branch office near me. I have no complaints, but have no idea how they compare to others. I don’t call for support often, but as far as I recall it has been perfectly sufficient. I call the local office, so it’s not a generic support center. They do offer level II quotes, but it costs $10-15/month, depending on which option you want. The main reason I thought to mention them now is because I see they have a special offer right now for opening a new account. 70 free trades + up to $2000, based on the size of the account ($1M+ for the full $2K).

As an aside, I found that on the BATS exchange website (batstrading.com) they have a “Book Viewer” that shows the top of book for bids and asks. I take that to be a very limited Level II display, but it’s only for their exchange.

Steve

1 Like
31

Getting out of Scottrade since they don’t have One Cancels Another (OCA) or other triggers as needed. TD Ameritrade has the OCA.

Looking at http://www.optionshouse.com/ since there commishes are far cheaper than Scottrade. Also, there software is much much better than Scottrade. They have a hot steamin deal with 150 Free trades.

Scottrade is not really for traders. They have been trying to tout there Elite software with accounts greater than 25K.

You need your triggers in place inorder to protect your Assettes at all times and not be taken to the cleaners.

Quillnpenn -

32

Scottrade is not really for traders.

Thanks Quillinpenn, but as you know, I’m the one who asked about it, I’m certainly not a trader, and this isn’t a trading board anyway.

Best,

Saul

2 Likes
33

Quillpen,

I’m not trying to push Scottrade, just putting info out there. It works for me well enough that I’ve never wanted to find another broker, but I have no reason to think they are better/worse than others. I wouldn’t consider 4.95 vs. 7.00 as being “far” cheaper, but that’s my perspective. If you make lots of trades it does add up.

I’m not a trader, I just keep it simple, but since you mentioned that they don’t have One Cancels Another (OCA) I was curious and decided to look. They do have One Cancels Other (OCO) and One Cancels All (OCA)in the new version of their Elite software. (Free use of Elite does indeed require an account greater than $25K) There are other triggers in both versions of Elite. I will say that I have not been entirely happy with the new version and have sent them several issues I’ve had. Not that I’ve found error type issues, I’m just not happy with some of the changes they’ve made.

Steve

34

…I have no complaints, but have no idea how they [Scottrade] compare to others…

Steve,

Up link I inserted a link to a brokerage review site and I’ll re-post it here for you: http://www.stockbrokers.com/reviews/beststockbrokers

The site has a nice overview of the features of all the major players.

On a side note, what is it about Elite you don’t like - the layout/display, actual data points or something else?

Thanks,
Pete

35

Steve,

Thanks for the heads up on the OCA. Been learning as time permits on the Elite’s old version. Guess I have to make ah substantial call to the broker.

best regards,

Quillnpenn -

1 Like
36

what is it about Elite you don’t like - the layout/display, actual data points or something else?

Pete,

My complaints with Elite are mostly new vs. old version, except for the latest one I ran across last week which I consider a problem that needs to be fixed…and I already got a response saying they were aware of the issue and expect it to be resolved soon. They also told me how to find the related information I was looking for.

I discovered the problem when I made a couple of trades last week. In the old version trade submission, confirmation and execution messages would all get displayed in the trader form. In the new version the execution pops up in a separate alert window. The problem was/is that the execution price is being rounded to the nearest penny even though at least one trade was down to hundredths of a penny. I record everything in a fairly sophisticated Excel spreadsheet and that caused me to initially enter the wrong values. Part two of that was that I couldn’t find a display of the day’s executions, something that was very easy to find in the old version.

My biggest outstanding complaint is the layout of the “Detailed Quote” form. The old version had a layout designer that let the user show the fields wanted in any layout desired. It was a little extra work to set up exactly what I wanted to see but it was worth it in the long run. I could see price, %change, bid, ask, volume, yield and other values in a nice, easy-to-read format that was useful to me. The new version just lists data in a grid format with no separation, size or color control and I find it much harder to visually locate the information I want quickly. It’s an annoyance to me because I had a setup I liked but isn’t available now. The old version is much more customizable at the detail level than the new one is. Much of that is nice to have but not necessary.

They have been making progress on resolving reported issues and have always responded to my “problem reports”. The old version is still available because they haven’t made the final, official cut-over to the new version yet. I’ve been bouncing between the two versions.

Steve

37

Hi Steve, Thanks for the helpful remarks about Scottrade. I’m really considering them, because no one has anything bad to say about them, but I won’t move unless I have to. Right now, the account that I had too many Good Faith Violations in, I’m changing to a margin account, which should end that problem, and I’m still below the limit with my IRA, so I’ll hang on with Schwab. I just though I should be prepared, in case.

Saul

38

Hi Saul and Everyone,

I just wanted to say thank you for all the great information. I really had no idea about many of these factors and have been pretty much just looking at trade costs. The Level II was especially interesting to what I am doing.

I don’t trade many options and don’t trade that often so those aren’t big deals for me at this time, but it can’t hurt to know a bit more.

Thanks to you all for educating me. I do really appreciate this outstanding group.

All the best, Brian

1 Like
39

…Scottrade. I’m really considering them…

Hi Saul,

I’ve been with Scottrade for a little over 3 years and really like them. Good telephone support when needed.

Some other advantages:
1.When you sign up, you get 3 free trades.

40

Saul,
I hit the wrong button before finishing the message. Here’s the whole message:
I’ve been with Scottrade for a little over 3 years and really like them. Good telephone support when needed.

  1. When you sign up, you get 3 free trades.

  2. When you transfer $10K or more from another account to Scottrade, Scottrade will reimburse the transfer fee. As my 401(k) gets to the $10K level, I transfer it over.

  3. Scottrade offers FRIP, a flexible dividend reinvestment plan with no fee. You can enter up to 5 stocks (ones you own or not). As your dividends accrue, you can use them to buy more shares. Since I prefer stocks that pay dividends, this is a real bonus to me. You just enter the per cent of the accumulated dividends that you want to go toward buying a particular stock and enter the date you want the transaction to take place. Sometimes I buy one share of a pricey stock and other times, split between several stocks. An easy way to increase holdings.

  4. If you recommend them, you and the new person get 3 free trades.

  5. The home page can be set to show just where you are in all categories: Positions, Watch List, FRIP, etc. I find it very easy to use.

  6. On occasion, they offer either cash bonuses or a lot of free trades for transfers of large amounts: $50K and up. I’ve taken advantage of that too.

Good luck!
Regina48

1 Like